The sale of Korea Aerospace Industries (KAI) is set for takeoff, but so far it has struggled to find a party interested enough to even fill out a bidding application.

On Friday, KAI’s stock value fell 2.24 percent to close at 26,200 won ($23). In recent trades, the stock price has fallen as the market expects the bid to fail.

The government and the Korea Finance Corporation (KoFC) last week announced its plan to privatize the aerospace company by selling the combined shares of 41.75 percent via a publicly opened bid. This means that the acquisition will only go forward when there are at least two competing bidders. The share includes the 11.4 percent owned by the state-owned financier as well as shares owned by the defense company Samsung Techwin, Hyundai Motor and KDB Bank. The deadline on the bid is set for Aug. 16.

Yet the only company that has shown interest is the nation’s leading airline Korean Air. Other companies possibly thought to be interested in the aerospace company such as Hyundai Heavy Industries and Hanwha have officially made it clear they are not taking part. No foreign companies are permitted to enter a bid.

Market observers say many of the companies are hesitant to get involved with a business that would have government involvement. The government plans to have a significant role in the company even after it is privatized by remaining the second-largest shareholder in the company. The KoFC will only be selling 11.41 percent of its 26.41 percent holdings.

Additionally, the high price tag on the sale as well as opposing public sentiment is believed to be working against the company. Brokers speculate the acquisition price of the aerospace company to be between 1.3 and 1.5 trillion won when adding a management premium thought to be roughly 30 percent.

Samsung Group is already focusing on the expansion of its own aerospace business through Samsung Techwin while Hyundai Motor recently has spent 1 trillion won to create an automotive electronics development subsidiary. Hyundai Heavy Industries has been stashing cash by selling its stocks, but market analysts speculate that the main purpose is to increase liquidity to protect against the global recession and the contracting shipbuilding market rather than to buy other companies.

Even Korean Air’s ability to buy KAI has been called into question. While the airline has enough cash to buy KAI - its cash and cashable assets as of the end of 2011 amounted to nearly 1.5 trillion won - the company is in sizable debt after buying five A380s last year.

On top of price, public sentiment in selling a state-owned defense company has been unfavorable.

“KAI is a public company that carries out national projects and has sensitive military information, as well as state-of-the-art technology related to national defense,” said Chyung Ho-joon, Democratic United Party lawmaker, last week. “The sale of KAI should immediately be withdrawn as it not only could generate losses for the economy but also could affect the expansion of military power.”

KAI’s labor union also demands the sale of the company be canceled, adding that the aerospace industry is not only responsible for a nation’s security but also a symbol of self-reliance.

The aerospace company, which was founded in 1999 by the government, exclusively controls Korea’s aerospace defense market. Roughly 8 trillion won of public money was injected in the company, which was established by combining all of the struggling aerospace departments of major Korean conglomerates, including Samsung Techwin in the late 1990s, into a single company. Since then the company grew at an exceptional rate. Not only does it supply parts to global air flight manufacturers such as Boeing and Airbus, but it has also exported aerospace defense products such as the KT-1 and T-50. KT-1 is a single-engine turboprop training aircraft that KAI jointly developed with Korea’s Agency for Defense Development. It made its first export to Indonesia in 2001 and also to Turkey in 2007. Currently, KAI is in negotiation with the Peruvian government in selling 24 KT-1 units. If the deal is sealed the company earns $200 million.

The T-50, also known as the “Golden Eagle,” is another major achievement that KAI has made. It is the nation’s first supersonic multirole jet fighter for advanced training that was developed solely via Korea’s own technology.

Last year KAI’s sales reached nearly 1.3 trillion won and reported an operating profit of 106 billion won.

The aerospace company hopes that the development of its multirole fighter jet KF-X would further secure the foundation for growth.

“The company will continue solid growth as orders are likely to increase with the new order target set at 5.5 trillion won for this year,” said Kwak Min-jeong, an analyst at BS Securities.